Capital One 360 checking overdraft practices and the overdraft practices of several banks have recently come under scrutiny for several reasons.

Over the last few years, numerous credit unions, banks, and other financial institutions have levied fees on their patrons that have taken a sharp turn upwards in amount and frequency.

There are many theories as to why this is so. One of them is that with the advent of internet availability and online banking, more people are taking advantage of the ability to see what is happening with their banking accounts daily.

This means that they can anticipate that there might be a situation of insufficient funds if they fail to act, they can choose to transfer funds accordingly. This anticipation is leading to fewer customers overdrawing their accounts.

Many wonder if large banks levy larger and more frequent fees because they would like to increase their bottom line. While Capital One 360 checking overdraft practices have not been proven to intentionally gouge customers, some have wondered if they engage in a practice known as reordering of transactions.

Reordering Transactions and The Capital One 360 Checking Overdraft

One of the practices that has come to the attention of consumer advocates and federal regulators has been that of reordering transactions.

Let’s say, for example, that all transactions were still physical checks with assigned numbers. The check writer would individual assign a date when writing a check out to a payee to pay a bill. Under some banks’ policies, the date may determine what order the transaction would be processed against the monies available in the associated account.

If Capital One 360 checking overdraft procedures were to reorder their transactions, they might take a bundle of incoming checks and process them from the highest amount to the lowest amount.

This activity creates a situation in which it is more likely that the customer would overdraft his account and draw on his Capital One 360 checking overdraft line of credit. The line of credit is overdraft protection, a loan of money from the bank to cover the cost of any non-sufficient funds to cover a check.

What is offered by the bank or financial institution as a courtesy to the customer, who ostensibly made an accounting error, could actually be caused by the reordering of transactions by the bank.

This practice is a difficult thing to catch an institution doing. Now, the patron owes money at interest and the bank’s profit margin has increased.

If there is no line of credit offered, as is the case with many credit unions, reordering can put a customer into an overdraft state with an average fee of $35 per transaction. These overdraft fees can multiply if not caught soon enough and, in order to bring the account balance out of a negative state, eat into the available money a customer has to live on in between pay periods.

This overdraft practice is more keenly felt by those people that live from paycheck-to-paycheck like students, senior citizens and the unemployed. Banking customers who have a significant daily balance are unlikely to be bothered by these practices.

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